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FOMC Decision, UK CPI, EIA Oil Data

calendar 22/03/2023 - 09:39 UTC

Inflation data from the UK released on Wednesday morning was showing fairly mixed results. While the consumer price index (CPI) was unexpectedly up in February from 10.1% to 10.4% year-on-year, the producer price index rapidly declined towards the 12%-range.

While the dollar traded once again clearly weaker against other major currencies, among emerging market currencies the trend was somewhat mixed. Pairs like the USD/ZAR and USD/INR continued moving slightly to the upside, while the USD/MXN pair retreated towards the 18.6-range.

Major cryptos like Bitcoin and Ethereum rebounded from the brief slump at the beginning of the week, trading again above $28k and around $1,800 respectively. Some altcoins like Ripple and Cardano were trading also clearly bullish with both cryptos up by double-digit percentages within the past 24 hours.

Stock market indices around the world continued to recover as the US 500 index surpassed the 4,000-level and other markets like the Germany 40 and Japan 225 Yen were also bullish. The Volatility Index VIX meanwhile came down from its recent high towards the price range also seen a month ago in the futures CFD contract.


As the euro traded much stronger against practically all major currencies as pairs like the EUR/CAD and EUR/NZD reached new year-to-date records and the dollar was in a weak position, it was hardly surprising that the EUR/USD pair easily surpassed the 1.075-threshold.

The key event for Wednesday is set to be the monetary policy decision by the FOMC. While overall still another 25 basis point rate hike is expected, given the current state of the economy and especially the banking sector it remains very much uncertain in which direction the central banking organisation will shift its monetary policy in the coming months. The daily opened dollar swap lines meant to shore up liquidity are already seen by some as a form of monetary policy intervention and policy makers will face the difficult choice of still fighting the too high rate of inflation or propping up the economy to avoid another crisis.



Gold prices strongly reversed from the recent high with the first major retracement in two weeks with the drawdown amounting to almost 1.7% on Tuesday. In silver and platinum markets however only a comparably small downside was observed with both metals trading almost flat on a weekly basis.

Though the weak dollar could be in theory a bullish signal for gold investors as a cheaper dollar makes the precious metal more affordable for holders of other currencies.

Possibly to some extent easing concerns about the banking crisis as central banks and regulators outside Switzerland sought to reassure that the bonds are in case of a bankruptcy still as should be senior to equity holdings. In Switzerland in case of the collapse and takeover of Credit Suisse holders of rather junior AT1 bonds were wiped out, while equity holders still received a small compensation for the takeover by UBS. CNBC reports that bond holders are preparing possible legal actions against such proceedings as the write-down in such bonds is estimated at a value of $17 billion.



As multiple markets started to rebound, oil prices also raced higher above the $69 per barrel mark for WTI crude oil. Oil still had its best trading day in March so far, despite the American Petroleum Institute (API)’s weekly data indicating that crude oil stockpiles were once again up by 3.3 million barrels while at the same time gasoline and distillate inventories once again declined by 1.1 million barrels and 1.8 million barrels respectively.

On Wednesday as usual the Energy Information Administration (EIA) also publishes its Weekly Petroleum Status Report, which also contains data about crude oil and products’ stockpiles.


US 500

Stock market indices continued to recover and the US 500 index eventually rose to a new two-weeks high above 4,000. After the significant losses, especially over the course of the previous week, stocks in the energy (US Energy ETF +3.43%), finance (US Financial Long x3 ETF +7.61%) and bank (US Banks ETF +5.24%) strongly rebounded.

Among major tech stocks Tesla (+7.85%) and Lucid (+6.37%) were some of the best-performing assets. For Tesla good news came from China where it reported still strong sales numbers, while another good news was the credit rating upgrade by rating agency Moody’s.

GameStop shares were trading during the extended session up by around 48% for the day after then company published its quarterly results. The cut of selling and administrative fees as well as job cuts allowed the much-hyped company finally post a profitable quarter, while the company is also seeking to expand in the realms of online sales.

US 500

The materials contained on this document should not in any way be construed, either explicitly or implicitly, directly or indirectly, as investment advice, recommendation or suggestion of an investment strategy with respect to a financial instrument, in any manner whatsoever. Any indication of past performance or simulated past performance included in this document is not a reliable indicator of future results. For the full disclaimer click here.

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